IMF Executive Board considers Sri Lanka’s loan facility for approval today (March 20)

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The Executive Board of the International Monetary Board (IMF) will meet today (March 20) to consider Sri Lanka’s bailout package of $2.9 billion for approval.

On 7th March IMF Executive Director Kristalina Georgieva said Sri Lankan authorities have made progress in taking decisive policy action, and have obtained financing assurances from all their major creditors including China, India, Japan, and the Paris Club.

The approval of the programme would immediately unlock IMF financing for Sri Lanka through the US$ 2.9 billion, 4-year loan under the Extended Fund Facility (EFF) as agreed when entering the staff-level agreement in early September last year.

The approval of the IMF Executive Board is also expected to unlock further funding lines through the World Bank and the Asian Development Bank, which are already lined up, according to Sri Lankan authorities.

Sri Lanka has secured financing assurances from all its major bilateral creditors for the IMF Executive Board to consider the bailout package for the country. If approved, this would be Sri Lanka’s 17th programme with the IMF.

The expected IMF bailout is seen as a necessary early step on a long road to economic recovery as Sri Lanka has to bring its debt to sustainable levels within a 10-year period following negotiations with its creditors for debt treatment.

The bailout package this time is somewhat different to previous ones as it could also be used for budget support, Central Bank Governor Dr. Nandalal Weerasinghe said.